A PLUMMETING Australian dollar is hoped to put welcome wind in the sails of the Far Northern tourism industry.

The currency, which had soared to US98.5c on the back of high interest rates and commodity prices, has shed about 10 per cent of its value in recent weeks to yesterday slump to just over 88c.

The dollar’s slide has been greeted with joy by Far Northern economists and tourism industry bosses.

"It is great news for the tourism industry," said Bill Cummings of Cummings Economics.

"I hope it continues to trend downward."

Mr Cummings said he expected the lower dollar to make Far Northern tourism more competitive in both the international and domestic markets.

He said the drop gave foreign currency greater buying power in Australia and domestic tourists got less value overseas, making Cairns more attractive. "It has been a major factor in the drop in the Japanese market and tourism overall," Mr Cummings said.

"And it has been far more attractive for Australian holidaymakers to travel overseas."

Tourism Tropical North Queensland boss Rob Giason was also pleased by the dollar’s fall but said the effect may take a while to kick in.

"Obviously it is going to make Tropical North Queensland more affordable for the international market which is struggling at the moment," he said.

Mr Giason said that market would take time to adjust but expected a more immediate reaction from Australian tourists.

Mr Cummings said recent speculation that the Reserve Bank would cut interest rates next month had been a major factor in the dollar’s fall as overseas investors fled to more profitable investment markets.

"It started affecting demand for the Australian dollar immediately," he said.

"As far as I am concerned it is a welcome adjustment."

While the dollar’s fall was good news for the region’s tourism and export economy, Mr Cummings said there was a "flip side".

"Imports will become more expensive which will put further pressure on inflation," he said. "The Reserve Bank has to take all these things into account."

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